Takeaways From November’s “Goldilocks” Jobs Report

The last jobs report investors will receive in 2024 is in the books. November nonfarm payrolls rose by 227,000 while the unemployment rate ticked up from 4.1% to 4.2%.^[i] Some called it a “Goldilocks” report—not too hot to stop Fed rate hikes, not too cold to cause worry about the health of the US economy. As always, we don’t think it is possible to predict how any report will influence the Fed. But we found a few nuggets worth highlighting as the US economy continues its return to prepandemic growth trends.

An Expected November Rebound

While November’s nonfarm payrolls exceeded expectations for 200,000, many observers anticipated an uptick after well-known, one-off headwinds weighed on October’s numbers: Hurricanes Helene and Milton shuttered up many businesses in the Southeast, while a labor strike at a major aerospace manufacturer also knocked payrolls.^[ii] Some commentators anticipated a noisy October report before its release.

A month later, that bounce materialized. The Bureau of Labor Statistics (BLS) revised October’s nonfarm payrolls rise by 24,000 (from 12,000 to 36,000), and November brought gains in October’s hard-hit industries.^[iii] For instance, after shedding -41,500 workers in October, transport equipment manufacturing added 32,000 in November as workers returned from striking.^[iv] Likewise, 512,000 workers reported not being at work due to bad weather in October—the sixth-highest monthly tally over the last decade.^[v] That number moderated to just 62,000 in November, below the median of 85,000 over that same stretch.^[vi]

November’s rebound highlights a helpful point: Monthly datasets can be volatile. Identifying what drives the bounciness can provide useful context, but what matters more is the longer-running trend. One way to see how recent numbers measure up on that front: The average of October and November’s nonfarm payroll growth is 131,500, in line with the past two years.^[vii] (Exhibit 1)

Exhibit 1: Squaring Up Recent Monthly Payroll Growth

Source: FactSet, as of 12/9/2024.

What Is Up With Retail?

One notable weak industry in November: retail trade (-28,000 on a seasonally adjusted basis), with weakness concentrated in general merchandise.^[viii] Yet on an unadjusted basis, retail employment rose by about 280,000.^[ix] So what gives?

The Labor Department adjusts data for seasonal swings to make it easier to identify trends. Historically, retailers hire seasonal workers toward yearend for the holiday shopping rush. But these adjustments don’t always get it right. This seasonal adjustment factor could be off due to some longer-running changes in Black Friday shopping (i.e., going from one day/weekend to a weekslong period of sales). Fewer retail hires this year may also reflect the gradual trend toward online sales. While going from foot traffic to Internet traffic may hit retail hiring figures, it could also boost transportation and warehousing jobs—companies need folks to move packages due to the proliferation of online shopping.

Now, as the BLS collects more information and revises the data accordingly, this initially estimated detraction could turn into a contribution. Regardless, November’s retail jobs decline isn’t breaking news. General merchandise store employment has ticked lower since July, but the downward trend for traditional in-person retail runs even longer—for instance, department store employment has been falling since the early 2000s.^[x] Yet that development hasn’t doomed the retail industry—rather, it marks its ongoing evolution.

An Underappreciated Christmas Gift

Inflation has understandably weighed on moods for the past couple years. Households have had to pay more for many common goods and may yearn for prepandemic prices. Though that sentiment is also understandable, getting that kind of deflation is extremely rare historically and tends to mean the economy is in trouble—and it isn’t how society usually emerges from hot inflation.

Instead, nations have typically overcome high inflation through wage growth. The improvement doesn’t come overnight, but gradually rising wages restore purchasing power. While individuals’ financial situations vary—not all will improve at the same rate or degree—November data indicate this continues to be the case. (Exhibit 2)

Exhibit 2: Wages Are Restoring Households’ Purchasing Power

Source: FactSet, as of 12/9/2024. Average hourly earnings, year-over-year change, November 2019 – November 2024, and headline CPI, year-over-year change, November 2019 – October 2024. Long-term average for average hourly earnings reflects December 2009 – December 2019.

Overall, the headline reaction to November’s jobs echoed October’s: Most takes were evenhanded. Similar to October’s weakness, headlines put November’s strength in context—a sign of some rational optimism. This is just one pocket of sentiment to weigh as we roll into 2025, but still, an interesting change from the deep pessimism in which this bull market was born.